To give a further boost to the market sentiment finance minister, P Chidambaram is likely to address the board of Securities and Exchange Board of India (Sebi) on Saturday.
“The Sebi board is likely to announce measures towards lowering transaction costs, relaxing collateral norms for foreign institutional investors (FIIs) and other intermediary-friendly measures,” said a source with the knowledge of the development.
The board on Saturday is likely to consider FII demands of accepting instruments such as government securities, fixed deposits, bank guarantees and mutual fund holdings as collateral. Foreign investors are not allowed to use such instruments as collateral for the value of their trades, as per margining rules.
Among other things, the board is also likely to discuss the road map for bringing down the trade settlement cycle from current 'T+2' to 'T+1'. In order words, the settlement of a securities transaction will be done the next day of the trade. Presently, it takes at least two days after the completion of the transaction for the shares to come into an investor's demat account.
Similarly, the Sebi is likely discuss the implementation and deadline for achieving the reduced initial public offering (IPO) timeline of just seven days from current 12 days. The market regulator aims to achieve this by making ASBA compulsory for retail investors and also by tweaking the distribution model.
Sebi is also likely to announce intermediary-friendly measures like reduction in transaction costs and further rationalisation of permanent licenses granted to intermediaries.
“The measures announced will be aimed at sending a signal to the market that Sebi and government are working towards removing major irritants and restoring confidence,” said the source.
At the meeting, Sebi chairman UK Sinha will also apprise the FM on the state of the securities market and highlight the recent measures taken by the Sebi board in the primary market and mutual fund space.
Sinha is also likely to discuss with the FM the implementation of single know your customer (KYC) for the entire financial sector. Sebi is already in discussions with other regulators, including Forward Markets Commission, for implementation of common KYC.
Before addressing the Sebi board, Chidambaram is also likely to meet senior Reserve Bank of India (RBI) officials in Mumbai on Saturday.
